Atleast 11 people were killed and 19 wounded late Wednesday night in a shootout in the small shrine to the Hindu goddess Devi, at the Nagarjot tourist resort near the capital Kathmandu, where about 500 villagers had gathered for the full moon festival of Yomari Punhi.

Eyewitnesses said while the gathering was celebrating the festival in the temple, an argument broke out between a Royal Nepalese Army soldier and some local boys. A brawl was avoided following the intervention by others present.

The soldier, who was reportedly in an inebriated state, returned later and opened fire at the crowd, killing 11 people. The soldier apparently shot himself later, eyewitnesses added.

The temple premises was splattered with blood after the shootout even as bullet holes dotted the temple walls and roof.

Eyewitnesses also recounted how the Nepalese Army converged upon the spot and literally dragged the wounded away.

Later in the day, thousands of people held a massive rally, protesting the killings and demanding King Gyanendra to restore multi-party democracy in the Himalayan Kingdom.

Shouting anti-King slogans, some 30,000 protestors marched through the streets of the Nepalese capital. The march had already been planned by the alliance but it quickly turned into a protest rally against the gruesome killings.

The seven parties have also announced a general strike on Friday.

"We have announced general strike in all three districts of Kathmandu valley, Kathmandu, Lalitpur and Bhaktapur against the killing of innocent people by the army," said Nepali Congress (Democratic) President Gopal Man Shrestha.